Starting From Strength

• Real wages grew 1.7% annually through February 2026, in the 85th percentile of long-term results excluding pandemic years, following the previous month's 1.9% growth (highest rate in five years)
• Personal consumption expenditures rose 2% in Q4 2025 after gains of 3.5% and 2.5% in the prior two quarters, with consumer spending representing the largest component of GDP
• Global corporate earnings are projected to grow by double-digits on average over the next 12 months, supporting the view that businesses have financial strength to weather geopolitical uncertainty

Summary

Key Thesis: Despite ongoing geopolitical tensions with Iran, the U.S. economy maintains strong fundamentals that should enable consumers and businesses to weather uncertainty from a position of financial strength.

Critical Data Points:

• Real wage growth: Inflation-adjusted earnings increased 1.7% year-over-year through February 2026, following 1.9% growth the previous month (the highest in five years, excluding pandemic distortions). This 1.7% rate ranks in the 85th percentile historically.

• Consumer spending: Personal consumption grew 2% in Q4 2025 (revised figures), following 3.5% and 2.5% growth in the two preceding quarters. This metric represents the largest component of GDP.

• Corporate earnings outlook: Global corporate earnings are projected to grow by double digits on average over the next 12 months.

Market Implications:

The article argues that strong wage growth outpacing inflation provides consumers with increased purchasing power and financial stability. Combined with healthy consumer spending trends and positive earnings expectations, these factors suggest economic resilience despite geopolitical risks from the Iran conflict.

Sectors/Products: The piece focuses broadly on the U.S. economy and consumer sector rather than specific companies or industries.

Outlook: While acknowledging that the Iran war's ultimate impact depends on conflict duration and aftermath, the analysis concludes that current economic strength positions consumers and businesses to "stand firm and come out in good shape."

The article is published by Horizon Investments' asset management team as market commentary for clients and investors.